Q1 2026 Chefs' Warehouse Inc Earnings Call

April 29, 2026

Speaker #1: Greetings and welcome to The Chefs' Warehouse First Quarter 2026 Earnings Conference Call. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Alex Aldous, General Counsel, Corporate Secretary, and Chief Government Relations Officer.

Operator: Greetings, welcome to The Chefs' Warehouse Q1 2026 Earnings Conference Call. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Alexandros Aldous, General Counsel, Corporate Secretary, and Chief Government Relations Officer. Please go ahead, sir.

Speaker #1: Please go ahead, sir.

Speaker #2: Thank you, Operator. Good morning, everyone. With me on today's call are Chris Pappas, founder, chairman, and CEO, and Jim Leddy, our CFO. By now, you should have access to our first quarter 2026 earnings press release.

Alexandros Aldous: Thank you, operator. Good morning, everyone. With me on today's call are Chris Pappas, Founder, Chairman, and CEO, and James Leddy, our CFO. By now, you should have access to our Q1 2026 earnings press release. It can also be found at www.chefswarehouse.com under the Investor Relations section. Throughout this conference call, we'll be presenting non-GAAP financial measures, including among others, historical and estimated EBITDA and adjusted EBITDA, as well as historical adjusted net income, adjusted earnings per share, adjusted operating expenses, adjusted operating expenses as a percentage of net sales and as a percentage of gross profit, net debt, net debt leverage, and free cash flow. These measures are not calculated in accordance with GAAP and may be calculated differently in similarly titled non-GAAP financial measures used by other companies.

Alexandros Aldous: Thank you, operator. Good morning, everyone. With me on today's call are Christopher Pappas, Founder, Chairman, and CEO, and James Leddy, our CFO. By now, you should have access to our Q1 2026 earnings press release. It can also be found at www.chefswarehouse.com under the Investor Relations section. Throughout this conference call, we'll be presenting non-GAAP financial measures, including among others, historical and estimated EBITDA and adjusted EBITDA, as well as historical adjusted net income, adjusted earnings per share, adjusted operating expenses, adjusted operating expenses as a percentage of net sales and as a percentage of gross profit, net debt, net debt leverage, and free cash flow. These measures are not calculated in accordance with GAAP and may be calculated differently in similarly titled non-GAAP financial measures used by other companies.

Speaker #2: It can also be found at www.chefswarehouse.com under the investor relations section. Throughout this conference call, we will be presenting non-GAAP financial measures, including among others, historical and estimated EBITDA and adjusted EBITDA, as well as historical adjusted net income, adjusted earnings per share, adjusted operating expenses, adjusted operating expenses as a percentage of net sales, and as a percentage of gross profit, net debt, net debt leverage, and free cash flow.

Speaker #2: These measures are not calculated in accordance with GAAP and may be calculated differently in similarly titled non-GAAP financial measures used by other companies. Quantitative reconciliations of our non-GAAP financial measures to their most directly comparable GAAP financial measures appear in today's press release and first quarter 2026 earnings presentation.

Alexandros Aldous: Quantitative reconciliations of our non-GAAP financial measures to their most directly comparable GAAP financial measures appear in today's press release and Q1 2026 earnings presentation. Before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements, including statements regarding our estimated financial performance. Such forward-looking statements are not guarantees of future performance, and therefore you should not put undue reliance on them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Some of these risks are mentioned in today's release. Others are discussed in our annual report on Form 10-K and quarterly reports on Form 10-Q, which are available on the SEC website. Today, we are going to provide a business update and go over our Q1 results in detail.

Speaker #2: Before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements including statements regarding our estimated financial performance.

Speaker #2: Such forward-looking statements are not guarantees of future performance, and therefore, you should not put undue reliance on them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect.

Speaker #2: Some of these risks are mentioned in today's release. Others are discussed in our annual report on Form 10-K and quarterly reports on Form 10-Q, which are available on the SEC website.

Speaker #2: Today, we are going to provide a business update and go over our first quarter results in detail. For a portion of our discussion this morning, we will refer to a few slides posted on the Chefs' Warehouse website under the investor relations section titled First Quarter 2026 earnings presentation.

Alexandros Aldous: For a portion of our discussion this morning, we will refer to a few slides posted on The Chefs' Warehouse website under the Investor Relations section titled First Quarter 2026 Earnings Presentation. Please note that these slides are disclosed at this time for illustration purposes only. We will open up the calls for questions. With that, I will turn the call over to Chris Pappas. Chris.

Speaker #2: Please note that these slides are disclosed at this time for illustration purposes only. Then we will open up the calls for questions. With that, I will turn the call over to Chris Pappas.

Speaker #2: Chris?

Speaker #3: Thank you, Alex. And thank you all for joining our first quarter 2026 earnings call. First quarter 2026 business activity displayed typical seasonal cadence as revenue trends coming out of January increased steadily into February and March.

Chris Pappas: Thank you, Alex, and thank you all for joining our Q1 2026 earnings call. Q1 2026 business activity displayed typical seasonal cadence as revenue trends coming out of January increased steadily into February and March. Despite some volatility in business due to extreme weather events and the start of the conflict in the Middle East later in the quarter, our team's exceptional execution and the strength of our North American business allowed us to continue to grow market share, delivering strong year-over-year growth in volume, product penetration, unique customer growth, revenue growth, and profitability growth. Momentum continued into April, and we currently expect double-digit top-line growth to start the Q2. Regarding the current situation in the Middle East, our teams and operations in the region, the immediate focus has been the safety and security of our people.

Christopher Pappas: Thank you, Alexandros, and thank you all for joining our Q1 2026 earnings call. Q1 2026 business activity displayed typical seasonal cadence as revenue trends coming out of January increased steadily into February and March. Despite some volatility in business due to extreme weather events and the start of the conflict in the Middle East later in the quarter, our team's exceptional execution and the strength of our North American business allowed us to continue to grow market share, delivering strong year-over-year growth in volume, product penetration, unique customer growth, revenue growth, and profitability growth. Momentum continued into April, and we currently expect double-digit top-line growth to start the Q2. Regarding the current situation in the Middle East, our teams and operations in the region, the immediate focus has been the safety and security of our people.

Speaker #3: Despite some volatility in business due to extreme weather events, and the start of the conflict in the Middle East later in the quarter, our teams' exceptional execution and the strength of our North American business allowed us to continue to grow market share delivering strong year-over-year growth in volume, product penetration, unique customer growth, revenue growth, and profitability growth.

Speaker #3: Momentum continued into April, and and we currently expect double-digit top-line growth to start the second quarter. Regarding the current situation in the Middle East, our teams and operations in the region, the immediate focus has been the safety and security of our people.

Speaker #3: We have followed safety protocols instituted by governing bodies and are effectively navigating volatility and supply chains and customer demand. Our leadership and team members have done an amazing job managing both personally and professionally through their volatility and uncertainty and we hope for a resolution to the conflict soon.

Chris Pappas: We have followed safety protocols instituted by governing bodies and are effectively navigating volatility and supply chains and customer demand. Our leadership and team members have done an amazing job managing both personally and professionally through the volatility and uncertainty, and we hope for a resolution to the conflict soon. James will provide more color on the financial impact in a few moments. I would like to thank all of The Chefs' Warehouse, from sales and operations to all the supporting functions, for delivering a great start to 2026.

Christopher Pappas: We have followed safety protocols instituted by governing bodies and are effectively navigating volatility and supply chains and customer demand. Our leadership and team members have done an amazing job managing both personally and professionally through the volatility and uncertainty, and we hope for a resolution to the conflict soon. James will provide more color on the financial impact in a few moments. I would like to thank all of The Chefs' Warehouse, from sales and operations to all the supporting functions, for delivering a great start to 2026.

Speaker #3: Jim will provide more color on the financial impact in a few moments. I would like to thank all of the Chef Warehouse from sales and operations to all the supporting functions for delivering a great start to 2026.

Speaker #3: Our regional leadership and their teams continue to execute our strategy to leverage our investments and train the next generation of sales and operational talent.

Chris Pappas: Our regional leadership and their teams continue to execute our strategy to leverage our investments and train the next generation of sales and operational talent. They're accelerating our long-term plan as they grow deeper understanding of our customer base and become the ultimate specialty ingredient professionals marrying technology with industry know-how to become trusted advisors to the best chefs in the world. With that, please refer to slide three of the presentation. A few highlights from Q1 include organic net sales grew 10.4%. Organic specialty sales were up 6.8% over the prior year, which was driven primarily by unique placement growth of 6.2%, specialty case growth of 5.7%, and price inflation. Unique customers grew 1.9% year-over-year.

Christopher Pappas: Our regional leadership and their teams continue to execute our strategy to leverage our investments and train the next generation of sales and operational talent. They're accelerating our long-term plan as they grow deeper understanding of our customer base and become the ultimate specialty ingredient professionals marrying technology with industry know-how to become trusted advisors to the best chefs in the world. With that, please refer to slide three of the presentation. A few highlights from Q1 include organic net sales grew 10.4%. Organic specialty sales were up 6.8% over the prior year, which was driven primarily by unique placement growth of 6.2%, specialty case growth of 5.7%, and price inflation. Unique customers grew 1.9% year-over-year.

Speaker #3: Their accelerating our long-term plan as they grow deeper understanding of our customer base and become the ultimate specialty ingredient professionals marrying technology with industry know-how to become trusted advisors to the best chefs in the world.

Speaker #3: With that, please refer to slide three of the presentation. A few highlights from the first quarter include organic net sales grew 10.4%. Organic specialty sales were up 6.8% driven primarily by unique placement growth of 6.2%.

Speaker #3: Specialty case growth of 5.7% and price inflation. Unique customers grew 1.9% year-over-year. Reported unique customer growth was impacted by the attrition related to our transition out of non-core customer business in Texas, we fully lapped this impact starting in the second quarter this year.

Chris Pappas: Reported unique customer growth was impacted by the attrition related to our transition out of non-core customer business in Texas. We fully lapped this impact starting in Q2 this year. Excluding this impact, Q1 year-over-year unique customer growth was approximately 4.3%. Pounds in center of the plate were approximately 6.2% higher than the prior year Q1. Gross profit margins increased approximately 53 basis points. Gross margin in the specialty category increased approximately 43 basis points as compared to Q1 2025, while gross margin in the center of the plate category increased approximately 110 basis points year-over-year. Jim will provide more detail on gross profit and margins in a few moments.

Christopher Pappas: Reported unique customer growth was impacted by the attrition related to our transition out of non-core customer business in Texas. We fully lapped this impact starting in Q2 this year. Excluding this impact, Q1 year-over-year unique customer growth was approximately 4.3%. Pounds in center of the plate were approximately 6.2% higher than the prior year Q1. Gross profit margins increased approximately 53 basis points. Gross margin in the specialty category increased approximately 43 basis points as compared to Q1 2025, while gross margin in the center of the plate category increased approximately 110 basis points year-over-year. Jim will provide more detail on gross profit and margins in a few moments.

Speaker #3: Excluding this impact, first quarter year-over-year unique customer growth was approximately 4.3%. Pounds in center of the plate were approximately 6.2% higher than the prior year first quarter.

Speaker #3: Gross profit margins increased approximately 53 basis points. Gross margin in the specialty category increased approximately 43 basis points as compared to the first quarter of 2025, while gross margin in the center of the plate category increased approximately 110 basis points year-over-year.

Speaker #3: Jim will provide more detail on gross profit and margins in a few moments. For an update on certain of our operating metrics including continued improvement in year-over-year gross profit per route and adjusted EBITDA per employee please refer to the slide provided in the appendix of our first quarter 2026 earnings presentation.

Chris Pappas: For an update on certain of our operating metrics, including continued improvement in year-over-year gross profit per route and adjusted EBITDA per employee, please refer to the slide provided in the appendix of our Q1 2026 earnings presentation. With that, I'll turn it over to Jim to discuss more detailed financial information for the quarter and an update on our liquidity. Jim?

Christopher Pappas: For an update on certain of our operating metrics, including continued improvement in year-over-year gross profit per route and adjusted EBITDA per employee, please refer to the slide provided in the appendix of our Q1 2026 earnings presentation. With that, I'll turn it over to James Leddy to discuss more detailed financial information for the quarter and an update on our liquidity. James?

Speaker #3: With that, I'll turn it over to Jim to discuss more detailed financial information for the quarter and an update on our liquidity. Jim?

Speaker #2: Thank you, Chris. And good morning, everyone. I'll now provide a comparison of our current quarter operating results versus the prior year quarter and provide an update on our balance sheet and liquidity.

James Leddy: Thank you, Chris, good morning, everyone. I'll now provide a comparison of our current Q operating results versus the prior year Q and provide an update on our balance sheet and liquidity. Please refer to slide 4. Our net sales for the Q ended 27 March 2026 increased approximately 11.4% to $1.059 billion from $950.7 million in Q1 2025. The growth in net sales was a result of an increase in organic sales of approximately 10.4% as well as the contribution of sales from acquisitions, which added approximately 1% to sales growth for the Q. Given the start of the conflict in Iran occurred in the last month of Q1, the impact to our Q1 aggregate year-over-year revenue growth was not material.

James Leddy: Thank you, Christopher, good morning, everyone. I'll now provide a comparison of our current Q operating results versus the prior year Q and provide an update on our balance sheet and liquidity. Please refer to slide 4. Our net sales for the Q ended 27 March 2026 increased approximately 11.4% to $1.059 billion from $950.7 million in Q1 2025. The growth in net sales was a result of an increase in organic sales of approximately 10.4% as well as the contribution of sales from acquisitions, which added approximately 1% to sales growth for the Q. Given the start of the conflict in Iran occurred in the last month of Q1, the impact to our Q1 aggregate year-over-year revenue growth was not material.

Speaker #2: Please refer to slide four. Our net sales for the quarter ended March 27th, 2026, increased approximately 11.4% to 1.059 billion from 950.7 million in the first quarter of 2025.

Speaker #2: The growth in net sales was a result of an increase in organic sales of approximately 10.4% as well as the contribution of sales from acquisitions which added approximately 1% to sales growth for the quarter.

Speaker #2: Given the start of the conflict in Iran occurred in the last month of the first quarter, the impact to our first quarter aggregate year-over-year revenue growth was not material.

Speaker #2: We estimate it reduced overall organic growth by approximately 50 basis points. Prior to the start of the conflict, our Middle East business grew approximately 11% in January and February versus the prior year.

James Leddy: We estimate it reduced overall organic growth by approximately 50 basis points. Prior to the start of the conflict, our Middle East business grew approximately 11% in January and February versus the prior year. While there remains variability in demand and customer buying patterns week to week, these past few weeks, our business located in the region has been operating at approximately 75% of prior year. The primary impact has come from low occupancy in hotels and resorts. Our operations in Qatar and Oman are performing much closer to plan in prior year as they are less reliant on tourism than Dubai and Abu Dhabi. As I just discussed, our North American operations, which represent over 90% of The Chefs' Warehouse, continues to grow well above our guidance while generating operating leverage and compelling year-over-year adjusted EBITDA growth.

Speaker #2: While there remains variability in demand and customer buying patterns week to week, these past few weeks our business located in the region have been operating at approximately 75% of prior year.

Speaker #2: The primary impact has come from low occupancy in hotels and resorts. Our operations in Qatar and Oman are performing much closer to plan in prior year as they are less reliant on tourism than Dubai and Abu Dhabi.

Speaker #2: As I just discussed, our North American operations which represent over 90% of the Chef's Warehouse continue to grow well above our guidance while generating operating leverage and compelling year-over-year adjusted EBITDA growth.

Speaker #2: As the situation in the Middle East currently remains uncertain, we have run multiple scenarios of performance and fact in a range of possibilities as it relates to our forward guidance.

James Leddy: As the situation in the Middle East currently remains uncertain, we have run multiple scenarios of performance and factored in a range of possibilities as it relates to our forward guidance. At this time, we are keeping our full year guidance unchanged with the potential for upward revisions should the situation in the region normalize. Net inflation was 4.1% in Q1, consisting of 1.5% inflation in our specialty category and 8.2% inflation in our center of the plate category versus the prior year quarter. Center of the plate inflation when adjusted for the impact of the Texas attrition was approximately 4.5% versus the prior year quarter.

Speaker #2: At this time, we are keeping our full-year guidance unchanged with the potential for upward revision should the situation in the region normalize. Net inflation was 4.1% in the first quarter, consisting of 1.5% inflation in our specialty category and 8.2% inflation in our center of the plate category versus the prior year quarter.

Speaker #2: Center of the plate inflation, when adjusted for the impact of the Texas attrition, was approximately 4.5% versus the prior year quarter. Gross profit increased 13.9% to $257.4 million for the first quarter of 2026 versus $226 million for the first quarter of 2025.

James Leddy: Gross profit increased 13.9% to $257.4 million for Q1 2026 versus $226 million for Q1 2025. Gross profit margins increased approximately 53 basis points to 24.3%. Selling, general, and administrative expenses increased approximately 10.5% to $224.1 million for Q1 2026 from $202.8 million for Q1 2025. The increase was primarily due to higher costs associated with compensation and benefits to support sales growth, higher depreciation driven by facility and fleet investments, and higher self-insurance related costs.

Speaker #2: Gross profit margins increased approximately 53 basis points to 24.3%. Selling, general and administrative expenses increased approximately 10.5% to $224.1 million for the first quarter of 2026, from $202.8 million for the first quarter of 2025.

Speaker #2: The increase was primarily due to higher costs associated with compensation and benefits to support sales growth, higher depreciation driven by facility and fleet investments, and higher self-insurance-related costs.

Speaker #2: Adjusted operating expenses increased 10.5% versus the prior year first quarter and as a percentage of net sales adjusted operating expenses were 18.6% for the first quarter of 2026.

James Leddy: Adjusted operating expenses increased 10.5% versus the prior year Q1, and as a percentage of net sales, adjusted operating expenses were 18.6% for Q1 2026. Operating income for Q1 2026 was $33.1 million compared to $22.7 million for Q1 2025. The increase in operating income was driven primarily by higher gross profit, partially offset by higher selling, general, and administrative expenses. Our GAAP net income was $17.4 million or $0.40 per diluted share for Q1 2026, compared to net income of $10.3 million or $0.25 per diluted share for Q1 2025.

Speaker #2: Operating income for the first quarter of 2026 was 33.1 million compared to 22.7 million for the first quarter of 2025. The increase in operating income was driven primarily by higher gross profit partially offset by higher selling general and administrative expenses.

Speaker #2: Our gap net income was 17.4 million or 40 cents per diluted share for the first quarter of 2026 compared to net income of 10.3 million or 25 cents per diluted share for the first quarter of 2025.

Speaker #2: On a non-gap basis, we had adjusted EBITDA of 60.1 million for the first quarter of 2026 compared to 47.5 million for the prior year first quarter.

James Leddy: On a non-GAAP basis, we had adjusted EBITDA of $60.1 million for Q1 2026, compared to $47.5 million for the prior year Q1. Adjusted net income was $17.2 million or $0.40 per diluted share for Q1 2026, compared to $10.2 million or $0.25 per diluted share for the prior year Q1. Turning to the balance sheet and an update on our liquidity. Please refer to slide five. At the end of Q1, we had total liquidity of $278.3 million, comprised of $122.7 million in cash and $155.6 million of availability under our ABL facility.

Speaker #2: Adjusted net income was 17.2 million or 40 cents per diluted share for the first quarter of 2026 compared to 10.2 million or 25 cents per diluted share for the prior year first quarter.

Speaker #2: Turning to the balance sheet and an update on our liquidity, please refer to slide five. At the end of the first quarter, we had total liquidity of 278.3 million comprised of 122.7 million in cash and 155.6 million of availability under our ABL facility.

Speaker #2: During the first quarter, we made prepayments of 5 million on our term loan maturing in 2029 and purchased 10 million equivalent shares under our share repurchase program.

James Leddy: During Q1, we made prepayments of $5 million on our term loan maturing in 2029 and purchased $10 million equivalent shares under our share repurchase program. As of 27 March 2026, total net debt was approximately $522 million, inclusive of all cash and cash equivalents, and net debt to adjusted EBITDA was approximately 1.9 times. As noted earlier, we maintain our previously provided full year guidance for 2026 as follows. We estimate that net sales for the full year 2026 will be in the range of $4.35 billion to $4.45 billion. Gross profit to be between $1.053 billion and $1.076 billion. Adjusted EBITDA to be between $276 million and $286 million.

Speaker #2: As of March 27th, 2026, total net debt was approximately 522 million inclusive of all cash and cash equivalents and net debt to adjusted EBITDA was approximately 1.9 times.

Speaker #2: As noted earlier, we maintain our previously provided full-year guidance for 2026 as follows. We estimate that net sales for the full year 2026 will be in the range of $4.35 billion to $4.45 billion, with gross profit to be between $1.053 billion and $1.076 billion.

Speaker #2: And adjusted EBITDA to be between 276 million and 286 million. Please note for the full year 2026, we expect the convertible notes maturing in 2028 to be diluted and therefore we expect the fully diluted share count to be between approximately 46 and 46.7 million shares.

James Leddy: Please note, for the full year 2026, we expect the convertible notes maturing in 2028 to be dilutive, and therefore, we expect the fully diluted share count to be between approximately 46 and 46.7 million shares. Thank you. At this point, we'll open it up to questions. Operator?

Speaker #2: Thank you. And at this point, we'll open it up to questions. Operator?

Speaker #3: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. The first question is from Alexander Slagle from Jefferies. Please go ahead.

Speaker #3: A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue.

Speaker #3: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.

Speaker #3: The first question is from Alex Slagel from Jefferies. Please go ahead.

Speaker #4: Hey, good morning. Congrats, and thanks for the color on the call so far.

Alexander Slagle: Hey, good morning. Congrats and thanks for the color on the call so far.

Speaker #2: Good morning, Oak.

James Leddy: Morning, Alex.

Speaker #4: Yeah, I know the Middle East is always it's hard for us to figure out everything that's going on. So appreciate everything you provided. I guess kind of curious on you gave some color on the top line.

Alexander Slagle: Yeah, I know, like the Middle East is always, it's hard for us to figure out everything that's going on, so appreciate, you know, everything you provided. I guess kind of curious, you gave some color on the top line. What else can you tell us about sort of the profitability implications for the Middle East business specifically and kind of what's baked into the outlook? I guess sizing it up also, I guess it sounds like the top line is, you know, less than 10% and, you know, I'm not sure on the EBITDA side if you could provide some color.

Speaker #4: What else can you tell us about sort of the profitability implications for the Middle East business specifically and kind of what's baked into the outlook?

Speaker #4: I guess sizing it up also, I guess it sounds like the top line is less than 10% and I'm not sure on the EBITDA side if you could provide some color.

James Leddy: Yeah, we don't necessarily disclose the % of EBITDA that they contribute, but, you know, just to go back to what we said, it's less than 10% of our overall business. It's a very profitable company. You know, we've made some pretty significant investments, and we feel really good about the medium to long-term prospects of the market and on our business there. Obviously, there's a little bit of a short-term bump in the road right now. But as I mentioned in our prepared remarks, we haven't adjusted our top line or our adjusted EBITDA guidance as a result. Like I said, we've modeled in a bunch of different scenarios.

Speaker #2: Yeah, we don't necessarily disclose the percent of EBITDA that they contribute, but just to go back to what we said it's less than 10% of our overall business.

Speaker #2: It's a very profitable company. We've made some pretty significant investments and we feel really good about the medium to long-term prospects of the market and our business there.

Speaker #2: Obviously, there's a little bit of a short-term bump in the road right now. But as I mentioned in our prepared remarks, we haven't adjusted our top line or our adjusted EBITDA guidance as a result.

Speaker #2: So like I said, we've modeled in a bunch of different scenarios. We generally don't change guidance after the first quarter, but the first quarter was so strong and the trends are continuing that obviously if the Middle East thing wasn't happening, I believe we would have adjusted our guidance this quarter.

James Leddy: You know, we generally don't change guidance after Q1, but Q1 was so strong and the trends are, you know, continuing that obviously, if the Middle East thing wasn't happening, I believe we would have adjusted our guidance this quarter. I think given the uncertainty, we're just gonna wait a little longer and see how things play out.

Speaker #2: But I think given the uncertainty we're just going to wait a little longer and see how things play out.

Speaker #4: Okay. In terms of the scenario, is it sort of assume recent trends continue through the rest of the year or several months or what's the kind of rough timeframe?

Alexander Slagle: Okay. In terms of the scenario, is it sort of assume recent trends continue through the rest of the year or, you know, several months, or what's the kinda rough timeframe?

James Leddy: I'm sorry. Basically, we would adjust guidance as things materialize, but I think the key point that we made in our prepared remarks was that over 90% of our business is more than making up for the minimal impact that we're seeing so far from the Middle East.

Speaker #2: I'm sorry. Basically, we would adjust guidance as things materialize, but I think the key point that we made in our prepared remarks was that over 90% of our business is more than making up for the middle and minimal impact that we're seeing so far from the Middle East.

Speaker #4: Okay. Thanks. And just to second question, on expectations for the summer and maybe potential for more domestic travel, I don't know, maybe that'll be a positive tailwind for chefs and sort of how you're looking at that important time period as we get up to the some of the celebration holidays and then the travel.

Alexander Slagle: Okay, thanks. Just a second question on expectations for the summer and maybe potential for more domestic travel. I don't know, maybe that'll be a positive tailwind for Chef, sort of how you're looking at that important time period as we get up to the some of the celebration holidays and then the travel.

Chris Pappas: Yeah. I mean, Alex, I mean, you know, it looks really strong, you know. You know, again, I mean, we didn't really see the war coming, but, you know, things start settling down in the Middle East.

Christopher Pappas: Yeah. I mean, Alexander, I mean, you know, it looks really strong, you know. You know, again, I mean, we didn't really see the war coming, but, you know, things start settling down in the Middle East.

Speaker #2: Yeah. I mean, Alex, I mean, it looks really strong. Again, I mean, we didn't really see the war coming, but things start settling down in the Middle East.

Speaker #2: I mean, I think all our investments for the last 15 years are starting to bear fruit and we're getting that acceleration of sales and leverage with the massive investments we've made to build this thing.

James Leddy: I think all our investments, you know, for the last, you know, 15 years are starting to bear fruit, and we're getting that acceleration of sales and leverage with, you know, the, you know, massive investments we've made to build this thing. You know, a little up or down, you know, with travel or, you know, more people going out. We just see a very strong, you know, field ahead of us. I think we're taking market share, and we're just continuing to mature as, you know, obviously the small public company in food service, you know, dominating really the, you know, the good, better, best part of it. We don't see a slowdown.

Christopher Pappas: I think all our investments, you know, for the last, you know, 15 years are starting to bear fruit, and we're getting that acceleration of sales and leverage with, you know, the, you know, massive investments we've made to build this thing. You know, a little up or down, you know, with travel or, you know, more people going out. We just see a very strong, you know, field ahead of us. I think we're taking market share, and we're just continuing to mature as, you know, obviously the small public company in food service, you know, dominating really the, you know, the good, better, best part of it. We don't see a slowdown.

Speaker #2: And a little up or down with travel or more people going out, but we just see a very, very strong field ahead of us.

Speaker #2: And I think we're taking market share and we're just continuing to mature as obviously the small public company in food service dominating really the good, better, best part of it.

Speaker #2: So we don't see a slowdown.

Speaker #4: All right. Thanks. Thanks for the color.

Alexander Slagle: All right. Thanks. Thanks for the color.

Speaker #2: Thanks.

James Leddy: Thanks.

Speaker #3: The next question is from Mark Carden from UBS. Please go ahead.

Operator: The next question is from Mark Carden from UBS. Please go ahead.

Speaker #5: Good morning. Thanks so much for taking the questions. To start, just another follow-up in the Middle East. Glad to hear your team is holding up okay out there.

Mark Carden: Good morning. Thanks so much for taking the questions. To start, just another follow-up in the Middle East. Glad to hear your team is holding up okay out there. For the 75% number, it sounds like that's stabilized over the course of the past few weeks. Is that correct? Then just as you think about the course of March, does that build in a meaningful acceleration, post-ceasefire?

Speaker #5: For the 75% number, it sounds like that's stabilized over the course of the past few weeks. Is that correct? And then just as you think about the course of March, that build-in, in, a meaningful acceleration post-ceasefire.

James Leddy: Yeah. I think the best way to put it, Mark, is, yeah, we mentioned that the last few weeks our business has been trending at about 75% of prior year. We've factored that into, you know, multiple scenarios going forward, different levels of percentage should the bombing start to re-escalate, and they're sending drones into Dubai. You know, we understand that there might be a downward impact. There could be an upward impact if things settle down. I think we've, you know, we've modeled that in and decided to, you know, to leave the guidance unchanged. That's probably the best way to think about it.

Speaker #2: Yeah. I think the best way to put it, Mark, is yeah, we mentioned that the last few weeks our business has been trending at about 75% of prior year.

Speaker #2: We've factored that into multiple scenarios going forward, different levels of percentage should the bombing start to re-escalate and they're sending drones into Dubai. We understand that there might be a downward impact.

Speaker #2: It could be an upward impact if things settle down. So I think we've modeled that in and decided to leave the guidance unchanged. That's probably the best way to think about it.

Speaker #5: Got it. That's helpful. And then any shifts to how you're thinking about inflation over the course of the next few quarters, just in the back of some of the recent commodity price fluctuations?

Mark Carden: Got it. That's helpful. Any shifts to how you're thinking about inflation over the course of the next few quarters, just on the back of some of the recent commodity price fluctuations and then, of course, changes in the price of oil?

Speaker #5: And then, of course, changes in the price of oil.

James Leddy: No, you know, I think, our teams have done an incredible job, really the last couple of years, but especially, you know, with our team maturing and the collaboration between our sales and operations, procurement, and pricing. The work that we've done with our, you know, diverse portfolio of suppliers. As Chris mentioned, a lot of that is just that maturity and training and experience is all coming to fruition. They, they've become very good at managing through, you know, inflationary and deflationary environments. I'll just go back to the diversity of our product portfolio.

Speaker #2: No. I think our teams have done an incredible job, really, the last couple of years, but especially with our team maturing and the collaboration between our sales and operations, procurement and pricing.

Speaker #2: The work that we've done with our diverse portfolio of suppliers and as Chris mentioned, a lot of that is just that maturity and training and experience is all coming to fruition.

Speaker #2: And they've become very good at managing through inflationary and deflationary environments. And I'll just go back to the diversity of our product portfolio. When you have 90,000 products flowing through your distribution center for a center for a company our size, and our customer base that demands quality and diversity of product, sourced from all around the world, you become very good at managing through dairy is deflationary year over year, but sequentially the prices in dairy and eggs and other dairy products have been within a range that's very manageable, that you can provide your customer with high-quality products at a good value and still manage the gross profit dollars to what we need to meet our targets.

James Leddy: You know, when you have 90,000 products flowing through your distribution center for centers for a company our size and our customer base that demands quality and diversity of product, sourced from all around the world, you become very good at managing through, you know, dairy is deflationary year over year, but sequentially, the prices in dairy and eggs and other dairy products have been within a range that's very manageable. You can provide your customer with high-quality products at a good value and still manage the gross profit dollars to what we need to meet our targets. I think it's just I'll go back to what Chris said.

Speaker #2: So I think it's just I'll go back to what Chris said. The investments that we've made in talent systems, technology, and infrastructure are all continuing to pay off and allowing us to manage through those type of price environments.

James Leddy: The investments that we've made in talent, systems, technology, and infrastructure are all continuing to pay off and allowing us to manage through those type of price environments.

Speaker #5: Great. Appreciate the color. Thanks so much. Good luck, guys.

Mark Carden: Great. Appreciate the color. Thanks so much, and good luck, guys.

Speaker #2: Thank you.

James Leddy: Thank you.

Speaker #3: The next question is from Kelly Bania from BMO Capital Markets. Please go ahead.

Operator: The next question is from Kelly Bania from BMO Capital Markets. Please go ahead.

Speaker #6: Good morning. Thanks for taking our questions. Just to follow up a little bit on the CME business, if I'm just doing the math right here, you said it was a 50 basis point drag on top line for Q1, and if I'm doing the math right, I think it's around a 200 to 300 basis point drag into April so far.

Kelly Bania: Good morning. Thanks for taking our questions. Just to follow up a little bit on the CME business. If I'm just doing the math right here, you said it was a 50 basis point drag on top line for Q1. If I'm doing the math right, I think it's around a 200 to 300 basis point drag, you know, into April so far. For your sales tool to be tracking at double digit, I'm not sure if they've accelerated or stayed kind of steady in total. Obviously, your North America business is kind of more than offsetting that. Just, can you just clarify that math for us? Just trying to make sure we're thinking about that right so far.

Speaker #6: But for your sales still to be tracking at double digits, I'm not sure if they've accelerated or stayed kind of steady in total. Obviously, your North America business is more than offsetting that.

Speaker #6: Can you just clarify that math for us? Just trying to make sure we're thinking about that right so far.

James Leddy: Thanks, Kelly. Yeah, look, I think we're growing well above our guidance and actually double digits with the impact of in the first quarter, both the two storm events as well as the one-month impact of the Middle East. Those three things combined cost us about 150 basis points on the quarter. You know, you look at our organic growth at, you know, 10.5%, you have the 1% wrap of mainly Italco Food Products. You could add 150 basis points to that if we didn't have those three events in the quarter. I don't know where you got the 200 or 300 basis points. That's not what is happening right now.

Speaker #2: Thanks, Kelly. Yeah. Look, I think we're growing well above our guidance, and actually double digits, with the impact in the first quarter of both the two storm events, as well as the one-month impact of the Middle East.

Speaker #2: Those three things combined cost us about 150 basis points on the quarter. So, you look at our organic growth at 10.5%, you have the 1% wrap of mainly Italco.

Speaker #2: You could add 150 basis points to that if we didn't have those three events in the quarter. So I don't know where you got to 200 or 300 basis points that's not what is happening right now.

James Leddy: You know, I think about it, if they continue to operate at 75%, as we mentioned in April, we're still growing double digits with the impact of the Middle East. Obviously, we didn't have any storms that hit us in April. I think you can just get from that our North American business is so strong. The team is executing at a very high level. I think, the, you know, you look at the Amex data that comes out, the high-end consumer is still spending. What's happening in the Middle East, we're overcoming, but obviously we're hoping that the conflict is resolved soon and they can get back to some sort of normality.

Speaker #2: I think about it: if they continue to operate at 75%, as we mentioned, in April we're still growing double digits with the impact of the Middle East.

Speaker #2: Obviously, we didn't have any storms that hit us in April. But so I think you can just get from that that our North American business is so strong.

Speaker #2: The team is executing at a very high level. I think you look at the Amex data that comes out, the high-end consumer is still spending.

Speaker #2: So what's happening in the Middle East, we're overcoming, but obviously we're hoping that the conflict is resolved soon and they can get back to some sort of normality.

Speaker #6: Okay. Very helpful, Jim. Can you also just elaborate a little bit more color on kind of your different markets, your more mature markets, and some of the earlier stage growth markets and if anything is changing on how they're contributing to the really strong North America top line whether it be Florida or Texas or New York or California, just any color on kind of how that split is contributing to this strong North America growth?

Kelly Bania: Okay. Very helpful, James Leddy. Can you also just elaborate a little bit more color on kind of your different markets, your more mature markets, and then some of the earlier, you know, stage growth markets, and if anything is changing on how they're contributing to the really strong North America top line? Whether it be, you know, Florida or Texas or New York or California, just any color on kind of how that split is contributing to this strong North America growth.

Speaker #4: Yeah. I think, Kelly, we've been kind of consistent with our observations that all our markets are growing. And I think the obvious are growing even faster new markets like Florida, which still we're pretty we're not new, new here, but we built our new facility.

Chris Pappas: I think, Kelly, we've been kind of consistent with, you know, our observations that, you know, all our markets are growing. I think the obvious are growing even faster. You know, new markets like Florida, which, we're not new here, but you know, we built our new facility, I think it's 3 years ago. You know, that has been, you know, over 20% plus growth, and we expect that to continue for many years to come. You know, as we continue to add salespeople and, you know, expand throughout all of Florida and become more of a specialty broadliner. It'll start to mimic, you know, our classic business, which is New York.

Christopher Pappas: I think, Kelly, we've been kind of consistent with, you know, our observations that, you know, all our markets are growing. I think the obvious are growing even faster. You know, new markets like Florida, which, we're not new here, but you know, we built our new facility, I think it's three years ago. You know, that has been, you know, over 20% plus growth, and we expect that to continue for many years to come. You know, as we continue to add salespeople and, you know, expand throughout all of Florida and become more of a specialty broadliner. It'll start to mimic, you know, our classic business, which is New York.

Speaker #4: I think it's three years ago and that has been over 20-plus percent growth. And we expect that to continue for many years to come.

Speaker #4: As we continue to add salespeople and expand throughout all of Florida and become more of a specialty broadliner, it'll start to mimic our classic business, which is New York.

Chris Pappas: You know, the West Coast continues to mature towards that New York model. We still think that it's gonna double, even though we're getting to a pretty good size out there. You know, Texas, we think is gonna be a top three. That's starting to have great growth, you know, and becoming more of a Chefs' Warehouse. The same in New England. You know, the smaller markets, even though, you know, they can grow 20%, 30%, 40% a year, they're still smaller markets. The big markets are still gonna drive, you know. Our next goal is $10 billion, and we see a lot of that coming from the major markets.

Speaker #4: And the West Coast continues to mature towards that New York model. We still think that it's going to double, even though we're getting to a pretty good size out there. Texas.

Christopher Pappas: You know, the West Coast continues to mature towards that New York model. We still think that it's gonna double, even though we're getting to a pretty good size out there. You know, Texas, we think is gonna be a top three. That's starting to have great growth, you know, and becoming more of a Chefs' Warehouse. The same in New England. You know, the smaller markets, even though, you know, they can grow 20%, 30%, 40% a year, they're still smaller markets. The big markets are still gonna drive, you know. Our next goal is $10 billion, and we see a lot of that coming from the major markets.

Speaker #4: We think it's going to be a top three that's starting to have great growth and becoming more of a chef warehouse the same in New England.

Speaker #4: So the smaller markets, even though they can grow 20, 30, 40 percent a year, they're still smaller markets. And the big markets are still going to drive our march towards our next goal, which is $10 billion.

Speaker #4: And we see a lot of that coming from the major, major markets Texas, California, all of New York, New England. Florida, where the density of obviously the population are.

Chris Pappas: You know, Texas, California, you know, all of New York, New England, Florida, you know, where the density of, obviously the populations are.

Christopher Pappas: You know, Texas, California, you know, all of New York, New England, Florida, you know, where the density of, obviously the populations are.

Speaker #6: Very helpful. And can I just add one more on just the gross margin? You touched on it a little bit, but I guess the center-of-plate margin seemed quite strong in light of the magnitude of inflation.

Kelly Bania: Very helpful. Can I just add one more on just the gross margin? You touched on it a little bit, but I guess the center of plate margin seemed quite strong in light of the magnitude of inflation. Maybe you can just help us understand what drove that, how you're thinking about that going forward, and just inflation overall, how your customers are, you know, handling that. Sounds like the sales force is managing that very well, but just any color that you're getting from your customers.

Speaker #6: Maybe you can just help us understand what drove that, how you're thinking about that going forward. And just inflation overall, how you're customers are handling that.

Speaker #6: Sounds like the sales force is managing that very well, but just any color that you're getting from your customers?

Speaker #2: Yeah. Look, I don't think I'll just go back to what I said to an earlier question. That the diversity of our product portfolio the expertise of and maturity of our teams that are collaborating to manage through that they've done an amazing job.

James Leddy: Yeah. You know, look, I don't think. I'll just go back to what I said to an earlier question, that the diversity of our product portfolio, the expertise and maturity of our teams that are, you know, collaborating to manage through that, they've done an amazing job. I mean, you know, center of the plate year-over-year, you know, it had some inflationary. During Q1, the sequential changes in prices are actually deflationary coming out of December, you know, into January, February, and March. This is just a seasonal impact that happens every year. That played out and is actually a little more pronounced.

Speaker #2: I mean, center of the plate year over year had some inflationary, but during the first quarter, the sequential changes in prices are actually deflationary coming out of December into January, February, and March.

Speaker #2: It's just a seasonal impact that happens every year. So that played out and is actually a little more pronounced. So I think the improvement in margin was really our teams really managing very effectively through that environment, through that sequential pricing environment.

James Leddy: I think, you know, the improvement in margin was really our teams really managing very effectively through that environment, through that sequential pricing environment. It's just a testament to how they've been managing their business.

Speaker #2: And it's just a testament to how they've been managing their business.

Speaker #4: Yeah. And Kelly, it's a little confusing just to look at margin. You get some deflation we expect margin to go up just because of the volatility.

Chris Pappas: Yeah. Kelly, it's a little confusing just to look at margin, you know. You know, you get some deflation, you know, we expect margin to go up, you know, just because of the volatility. Usually when, you know, prices really shoot up, you know, we're managing towards gross profit dollars versus margin because really, you know, our basic overhead is kind of fixed. It's really the gross profit dollars we take to the bank. The mix starts to change. You know, this is why, you know, the way the protein team manages, again, is towards figuring out how they can hit the gross profit dollars they need to run their businesses and, you know, produce the profitability that we need.

Christopher Pappas: Yeah. Kelly, it's a little confusing just to look at margin, you know. You know, you get some deflation, you know, we expect margin to go up, you know, just because of the volatility. Usually when, you know, prices really shoot up, you know, we're managing towards gross profit dollars versus margin because really, you know, our basic overhead is kind of fixed. It's really the gross profit dollars we take to the bank. The mix starts to change. You know, this is why, you know, the way the protein team manages, again, is towards figuring out how they can hit the gross profit dollars they need to run their businesses and, you know, produce the profitability that we need.

Speaker #4: Usually, when prices really shoot up, we're managing towards gross profit dollars. Versus margin because really our basic overhead is kind of fixed. So it's really the gross profit dollars we take to the bank.

Speaker #4: And the mix starts to change. And this is why the way the protein team manages again is towards figuring out how they can hit the gross profit dollars they need to run their businesses and produce the profitability that we need.

Speaker #4: So it gets a little fuzzy because the mix starts to change a lot. When you have a lot of inflation, we always say people start to eat more premium hamburgers and steaks maybe at the non-steakhouse kind of dining out.

Chris Pappas: It gets a little fuzzy because the mix starts to change a lot when you have a lot of inflation. You know, we always say people start to eat more premium hamburgers than steaks, maybe at, you know, the non-steakhouse kind of dining out. You know, you sell more chicken, you sell more sausage. It's a big mix of products. Again, you know, the demand for the premium products that we sell, you know, even to, you know, I don't wanna say to my surprise, but it kind of plays into what we're, what we're seeing with, you know, the higher end consumers are not going to not order a great steak because it's $5 more.

Christopher Pappas: It gets a little fuzzy because the mix starts to change a lot when you have a lot of inflation. You know, we always say people start to eat more premium hamburgers than steaks, maybe at, you know, the non-steakhouse kind of dining out. You know, you sell more chicken, you sell more sausage. It's a big mix of products. Again, you know, the demand for the premium products that we sell, you know, even to, you know, I don't wanna say to my surprise, but it kind of plays into what we're, what we're seeing with, you know, the higher end consumers are not going to not order a great steak because it's $5 more.

Speaker #4: You sell more chicken. You sell more sausage. You so it's a big mix of products, but again, the demand for the premium products that we sell even to I don't want to say to my surprise, but it kind of plays into what we're seeing with the higher-end consumers are not going to not order a great steak because it's $5 more.

Speaker #4: So I've always thought that that consumer base I think it's my 41st year. I have not seen that trend change, right? So gas prices going up, 30, 40, 50 cents a gallon doesn't change a lot of that behavior.

Chris Pappas: I've always thought that, you know, that consumer base, I think it's my 41st year, I have not seen that trend change, right? You know, gas prices going up, you know, $0.30, $0.40, $0.50 a gallon doesn't change a lot of that behavior, and I think we're just consistently seeing that.

Christopher Pappas: I've always thought that, you know, that consumer base, I think it's my 41st year, I have not seen that trend change, right? You know, gas prices going up, you know, $0.30, $0.40, $0.50 a gallon doesn't change a lot of that behavior, and I think we're just consistently seeing that.

Speaker #4: And I think we're just consistently seeing that.

Speaker #6: Thank you.

Kelly Bania: Thank you.

Speaker #2: Thank you.

Chris Pappas: Thank you.

Christopher Pappas: Thank you.

Speaker #6: The next question is from Peter Sally from BTIG. Please go ahead.

Operator: The next question is from Peter Saleh from BTIG. Please go ahead.

Speaker #5: Great. Hey, guys. Congrats on a great quarter. I did want to come back to the conversation around margin. Your EBITDA margin this quarter was exceptionally high and much higher than what we were modeling.

Peter Saleh: Great. Hey, guys. Congrats on a great quarter. I did wanna come back to the conversation around margin. You know, your EBITDA margin this quarter was exceptionally high and much higher than what we were modeling, highest on record. Just, you know, I know you guys have talked about maybe, you know, 20 basis points or so of EBITDA margin expansion every year. If you flow through these numbers for the year, you kinda get there without any more expansion. Just, you know, can you help us out a little bit in terms of, do you think that 20 basis point number is kinda still the good number going forward?

Speaker #5: Highest on record. Just I know you guys have talked about maybe 20 basis points or so of EBITDA margin expansion every year. But if you flow through these numbers to the year, you kind of get there without any more expansion.

Speaker #5: Just can you help us out a little bit in terms of do you think that 20 basis point number is kind of still the good number going forward, or have we hit kind of an inflection point where we should start to see a little bit more EBITDA margin flow through to the bottom line?

Peter Saleh: Have we hit kind of an inflection point where we should start to see a little bit more EBITDA margin flow through to the bottom line? Thank you.

Speaker #5: Thank you.

Speaker #2: Yeah. Thanks for the question, Peter. Yeah. Look, I'll go back to what I said if we didn't have the uncertainty in the Middle East right now, I think we would we usually don't this early in the year, update our guidance.

James Leddy: Thanks for the question, Peter Saleh. Look, I'll go back to what I said. If we didn't have the uncertainty in the Middle East right now, you know, I think we would, you know. We usually don't, this early in the year, update our guidance, but I think we would have, if, you know, if we had some sort of certainty around what's gonna happen in the Middle East. Once again, it's less than 10% of our business, but, you know, we don't know how it could play out the rest of the year.

Speaker #2: But I think we would have. If we had some sort of certainty around what's going to happen in the Middle East—once again, it's less than 10% of our business.

Speaker #2: But we don't know how it could play out the rest of the year. If it stays where it is or gets better, I would imagine we would be adjusting up.

James Leddy: If it, you know, if it stays where it is or gets better, I would imagine we would be adjusting up, you know, 2025 over 2024, we delivered more than, you know, 20 or 25 basis points of EBITDA margin improvement. I think, you know, to what Chris mentioned earlier, we're really starting to see the operating leverage from all the investments that we've made. There's certainly a really strong possibility that we can deliver more. It's just early in the year, and the uncertainty around the Middle East is preventing us from adjusting that up right now.

James Leddy: If it, you know, if it stays where it is or gets better, I would imagine we would be adjusting up, you know, 2025 over 2024, we delivered more than, you know, 20 or 25 basis points of EBITDA margin improvement. I think, you know, to what Christopher mentioned earlier, we're really starting to see the operating leverage from all the investments that we've made. There's certainly a really strong possibility that we can deliver more. It's just early in the year, and the uncertainty around the Middle East is preventing us from adjusting that up right now.

Speaker #2: And 25 over 24, we delivered more than 20 or 25 basis points of EBITDA margin improvement. And I think to what Chris mentioned earlier, we're really starting to see the operating leverage from all the investments that we've made.

Speaker #2: So there's certainly a really strong possibility that we can deliver more. It's just early in the year, and the uncertainty around the Middle East is preventing us from adjusting that up right now.

Speaker #4: Yeah.

Chris Pappas: Yeah.

Christopher Pappas: Yeah.

Speaker #5: Yeah. And then can I just ask on the capital structure and share repurchase? You guys repurchased $10 million in the first quarter. Your leverage is just naturally deleveraging.

Peter Saleh: Yeah. Then can I just ask on the capital structure and share repurchase. You guys repurchased $10 million in Q1. Your leverage is, you know, just naturally de-levering. Should we expect more share repurchase as we go through the year? I mean, how do we think about that for the balance of 2026? Thanks.

Speaker #5: Should we expect more share repurchase as we go through the year? I mean, how do we think about that for the balance of '26?

Speaker #5: Thanks.

Speaker #2: Yeah. I think we haven't really changed our outlook. We want to remain with some dry powder to take advantage of some potential acquired growth that may present itself that could be strategic and accretive important for our growth plan.

James Leddy: Yeah. I think we haven't really changed our outlook. We wanna remain, you know, with some dry powder to take advantage of some, you know, potential acquired growth that may present itself that could be strategic and accretive, important for, you know, our growth plan. We wanna continue to repurchase some shares opportunistically. We may continue to, you know, very gradually pay down some debt. I think we're gonna continue kind of the way that we've been operating the last year or 2. Don't see a major change, but we certainly could allocate more towards share repurchase should the opportunity present itself.

Speaker #2: We want to continue to repurchase some shares, es, opportunistically. And we may continue to very gradually pay down some debt. So I think we're going to continue kind of the way that we've been operating the last year or two.

Speaker #2: Don't see a major change, but we certainly could allocate more towards share repurchase. So should the opportunity present itself.

Speaker #5: Great. Thank you very much.

Peter Saleh: Great. Thank you very much.

Speaker #2: Thank you.

James Leddy: Thank you.

Speaker #6: The next question is from Brian Harbor from Morgan Stanley. Please go ahead.

Operator: The next question is from Brian Harbor from Morgan Stanley. Please go ahead.

Operator: The next question is from Brian Harbour from Morgan Stanley. Please go ahead.

Speaker #7: Hi. This is Hillary Lee on for Brian Harbor. Congrats on the quarter, guys. Just wondering, outside of the Middle East improving, do you guys see any other potential tailwinds for the consumer?

Hillary Lee: Hi, this is Hillary Lee on for Brian Harbor. Congrats on the quarter, guys. Just wondering, you know, outside of the Middle East improving, do you guys see any other potential tailwinds for the consumer?

Chris Pappas: You know, we're really happy with what we're seeing at this point. I think a real possibility uptick right now is what we're hearing with the World Cup, right, being in the United States and a lot of our major markets. You know, we don't build, you know, we don't build these things in, but I think with, I forget how many, you know, millions of people coming in for the Cup in our major cities, I think it's gonna be really good for our customers.

Christopher Pappas: You know, we're really happy with what we're seeing at this point. I think a real possibility uptick right now is what we're hearing with the World Cup, right, being in the United States and a lot of our major markets. You know, we don't build, you know, we don't build these things in, but I think with, I forget how many, you know, millions of people coming in for the Cup in our major cities, I think it's gonna be really good for our customers.

Speaker #4: We're really happy with what we're seeing at this point. I think a real possibility uptick right now is what we're hearing with the World Cup, right, being in the United States and a lot of our major markets.

Speaker #4: So we don't build we don't build these things in, but I think with I forget how many millions of people coming in for the Cup in our major cities, I think it's going to be really good for our customers.

Chris Pappas: We think, you know, we think the consumer of, you know, the restaurants and hotels that we supply, you know, the spending, what we see is strong, and we have not heard of anything really changing. We think bookings are strong, and our customers are optimistic. You know, we like the way, you know, the year is. Besides the Middle East, we're really enjoying, you know, what we have set up to supply for the next X amount of years really lining up in our favor.

Speaker #4: So we think we think the consumer of the restaurants and hotels that we supply the spending, what we see is strong. And we have not heard of anything really changing.

Christopher Pappas: We think, you know, we think the consumer of, you know, the restaurants and hotels that we supply, you know, the spending, what we see is strong, and we have not heard of anything really changing. We think bookings are strong, and our customers are optimistic. You know, we like the way, you know, the year is. Besides the Middle East, we're really enjoying, you know, what we have set up to supply for the next X amount of years really lining up in our favor.

Speaker #4: We think bookings are strong. And our customers are optimistic. So we like the way the year is besides the Middle East. We're really enjoying what we have set up to supply for the next X amount of years, really lining up in our favor.

Speaker #7: Got it. And kind of just to follow up on that, have you guys ever seen or are you able to quantify any impact that you've seen from any other major events like the Olympics a couple of years ago?

Hillary Lee: Got it. Kind of just to follow up on that, like, have you guys ever seen or are you able to quantify any impact that you've seen from any other major events like the Olympics a couple years ago?

James Leddy: We don't really quantify it. Obviously, when there are events, whether it's F1 or, you know, something like the World Cup or the Olympics.

Speaker #2: We don't really quantify it. Obviously, when there are events, whether it's F1 or something like the World Cup or the Olympics or other types of events, we do see a temporary bump, but it's not something we model in for the long term.

Christopher Pappas: We don't really quantify it. Obviously, when there are events, whether it's F1 or, you know, something like the World Cup or the Olympics.

Chris Pappas: Other types of events. We do see, you know, a temporary bump, but it's not something we model in for the long term.

Christopher Pappas: Other types of events. We do see, you know, a temporary bump, but it's not something we model in for the long term.

Hillary Lee: Got it. All right, thanks guys. Congrats on the quarter again.

Speaker #7: Got it. All right. Thanks, guys. Congrats on the quarter again.

Speaker #2: Thank you.

Chris Pappas: Thank you.

Christopher Pappas: Thank you.

Speaker #6: The next question is from Todd Brooks from Benchmark Company. Please go ahead.

Operator: The next question is from Todd Brooks from Benchmark Company. Please go ahead.

Speaker #8: Hey, good morning. Thanks for taking my questions. Obviously, strong results in Q1 in the US. And Chris, you talked to the typical seasonal acceleration gym.

Todd Brooks: Hey, good morning. Thanks for taking my questions. Obviously, strong results in Q1 in the US, Chris, you talked to the typical seasonal acceleration. Jim, you pointed to kind of normalizing maybe kind of 12% organic growth if you take out weather and CME. You talked about double digits in April. I know we're also going into a strong period here with graduations, Mother's Day, return of outdoor dining, you just pointed out the World Cup. Are we still accelerating as we go into Q2? Chris, when you're talking to clients, just what's their outlook on kind of the how the table's being set for them for the next couple of quarters here?

Todd Brooks: Hey, good morning. Thanks for taking my questions. Obviously, strong results in Q1 in the US, Christopher, you talked to the typical seasonal acceleration. Jim, you pointed to kind of normalizing maybe kind of 12% organic growth if you take out weather and CME. You talked about double digits in April. I know we're also going into a strong period here with graduations, Mother's Day, return of outdoor dining, you just pointed out the World Cup. Are we still accelerating as we go into Q2? Chris, when you're talking to clients, just what's their outlook on kind of the how the table's being set for them for the next couple of quarters here?

Speaker #8: You pointed to kind of normalizing maybe kind of 12% organic growth. If you take out weather and CME, you talked about double digits in April.

Speaker #8: I know we're also going into a strong period here with graduations, Mother's Day. Return of outdoor dining, and then you just pointed out the World Cup.

Speaker #8: Are we still accelerating as we go into Q2? And Chris, when you're talking to clients, just what's their outlook on kind of the how the table's being set for them for the next couple of quarters here?

Chris Pappas: Cautiously, very, very cautiously optimistic, Todd. You know, I mean, the Middle East obviously was, you know, not in our plans, you know. 'Cause I mean, the business, the business is really strong, you know. You know, nobody has a crystal ball, but, you know, we don't really see a change in behavior. I think that, you know, we've invested for, you know, to take more market share and be the premier high-end, you know, partner for the world's greatest chefs.

Christopher Pappas: Cautiously, very, very cautiously optimistic, Todd. You know, I mean, the Middle East obviously was, you know, not in our plans, you know. 'Cause I mean, the business, the business is really strong, you know. You know, nobody has a crystal ball, but, you know, we don't really see a change in behavior. I think that, you know, we've invested for, you know, to take more market share and be the premier high-end, you know, partner for the world's greatest chefs.

Speaker #4: Cautiously, very cautiously optimistic. Todd, I mean, the Middle East, obviously, was not in our plans because, I mean, the business is really strong. Nobody has a crystal ball, but we don't really see a change in behavior.

Speaker #4: I think that we've invested for more to take more market share and be the premier high-end partner for the world's greatest chefs. And there's been a shift.

Chris Pappas: You know, there's been a shift, and I don't see that shift of, you know, consumers, you know, willing to give others, other things up, you know, except for they're, you know, extremely affluent, that nothing really is gonna change their behavior as far as, you know, dining out and travel. I just think it's the acceleration is, I think, more consumers are choosing to, you know, for the experience, you know. The, for the travel, for the dining out, you know, for those sports experiences versus other things in the past, maybe things they would've bought or spent more money on. I don't see that changing and I think our customers are benefiting for it.

Christopher Pappas: You know, there's been a shift, and I don't see that shift of, you know, consumers, you know, willing to give others, other things up, you know, except for they're, you know, extremely affluent, that nothing really is gonna change their behavior as far as, you know, dining out and travel. I just think it's the acceleration is, I think, more consumers are choosing to, you know, for the experience, you know. The, for the travel, for the dining out, you know, for those sports experiences versus other things in the past, maybe things they would've bought or spent more money on. I don't see that changing and I think our customers are benefiting for it.

Speaker #4: And I don't see that shift of consumers willing to give other things up, except for their extremely affluent that nothing really is going to change their behavior as far as dining out and travel.

Speaker #4: I just think it's the acceleration is, I think, more consumers are choosing to for the experience. For the travel, for the dining out, for those sports experiences versus other things in the past, maybe things that would have bought or spent more money on.

Speaker #4: So I don't see that changing. And I think our customers are benefiting for it. We see a consistent investment in more restaurants, more hotels opening, more parties.

Chris Pappas: You know, we see a consistent investment in more restaurants, more hotels opening, more, you know, more parties, you know, lots of catering and, you know, more people visiting the United States on the high end obviously plays in our favor.

Christopher Pappas: You know, we see a consistent investment in more restaurants, more hotels opening, more, you know, more parties, you know, lots of catering and, you know, more people visiting the United States on the high end obviously plays in our favor.

Speaker #4: Lots of catering. And more people visiting the United States on the high end. Obviously, plays in our favor.

Todd Brooks: That's great. Then Jim, just a question for you. Peter was asking the question about the EBITDA margin expansion and the profitability of the business. How much of this now is kind of related to the existing facilities that you've stood up, just putting more volume through those facilities versus how much is due to the investments that you've made around technology, process, and people that you guys highlighted at the investor day? If you were attributing the gains that we're seeing in EBITDA margin, how would you kind of parse it between the two? Thanks.

Todd Brooks: That's great. Then James, just a question for you. Peter was asking the question about the EBITDA margin expansion and the profitability of the business. How much of this now is kind of related to the existing facilities that you've stood up, just putting more volume through those facilities versus how much is due to the investments that you've made around technology, process, and people that you guys highlighted at the investor day? If you were attributing the gains that we're seeing in EBITDA margin, how would you kind of parse it between the two? Thanks.

Speaker #8: That's great. And then Jim, just a question for you. And Peter was asking the question about the EBITDA margin expansion and the profitability of the business.

Speaker #8: How much of this now is kind of related to the existing facilities that you've stood up, just putting more volume through those facilities versus how much is due to the investments that you've made around technology and process and people that you guys highlighted at the investor day?

Speaker #8: If you were attributing the gains that we're seeing in EBITDA margin, how would you kind of parse it between the two, thanks?

James Leddy: Goldilocks. Todd, we don't necessarily put a dollar amount or percent of our accretion of either adjusted EBITDA dollars or margin to a particular bucket. I would just go back to kind of what Chris has talked about in his prepared remarks and also, you know, what we talked about earlier in the call, and that is all of these things coming together. I think the investment in training in our salespeople, especially in the nascent high growth markets that we've put infrastructure in to give them capacity and folded in acquisitions.

Speaker #4: Goldilocks.

Speaker #2: Todd, we don't necessarily put a dollar amount or percent of our accretion of either adjusted EBITDA dollars or margin to a particular bucket. But what I would just go back to kind of what Chris has talked about in his prepared marks and also what we talked about earlier in the call, and that is all of these things coming together.

Speaker #2: I think the investment in training in our salespeople, especially in the nascent high-growth markets that we've put infrastructure in to give them capacity and folded in acquisitions, and then you start off with a young, maturing salesforce.

Chris Pappas: Then you start off with a young, maturing sales force and as they grow, you know, with the leadership team that we have regionally, very experienced leaders that have run distribution businesses, food distribution businesses themselves, before joining us and know every area of the business from sales, operations, to procurement, to pricing. They benefit from that. As Chris mentioned, just marrying technology with knowing our customers better. That together with, you know, the infrastructure investments and just the experience and growth of our teams that are managing pricing and procurement and operations, it's all coming together.

James Leddy: Then you start off with a young, maturing sales force and as they grow, you know, with the leadership team that we have regionally, very experienced leaders that have run distribution businesses, food distribution businesses themselves, before joining us and know every area of the business from sales, operations, to procurement, to pricing. They benefit from that. As Chris mentioned, just marrying technology with knowing our customers better. That together with, you know, the infrastructure investments and just the experience and growth of our teams that are managing pricing and procurement and operations, it's all coming together.

Speaker #2: And as they grow with the leadership team that we have regionally, very experienced leaders that have run distribution businesses, food distribution businesses themselves before joining us and know every area of the business from sales, operations, to procurement, to pricing.

Speaker #2: They benefit from that. And as Chris mentioned, just marrying technology with knowing our customers better, that together with the infrastructure investments and just the experience and growth of our teams that are managing pricing and procurement and operations, it's all coming together.

Speaker #2: It's all there's not one thing that we would point out that says, "This is driving our EBITDA margin higher." So I would say that I'd ask Chris to add anything that he might want to add.

Chris Pappas: There's not one thing that we would point out that says, This is driving our EBITDA margin higher. I would say that, and I'd ask Chris to add anything that he might wanna add. Yeah. Yeah, I think, Todd, when I look back, I think it's, what are we? It's the 15th year being the, you know, public. I thought it would be easier at that point, I think lessons learned is that, you know, to build something like Chefs' Warehouse, it, you know, just doesn't get built overnight. You could have all the technology in the world, it, of course, it really helps, it's just so much more complicated. Like, you know, as you just said, it takes the buildings, it takes the maturity.

James Leddy: There's not one thing that we would point out that says, This is driving our EBITDA margin higher. I would say that, and I'd ask Christopher to add anything that he might wanna add.

Speaker #4: Yeah. Yeah. I think, Todd, when I look back, I think it's what are we? It's the 15th year BMW public. I thought it would be easier, at that point.

Christopher Pappas: Yeah. Yeah, I think, Todd, when I look back, I think it's, what are we? It's the 15th year being the, you know, public. I thought it would be easier at that point, I think lessons learned is that, you know, to build something like Chefs' Warehouse, it, you know, just doesn't get built overnight. You could have all the technology in the world, it, of course, it really helps, it's just so much more complicated. Like, you know, as you just said, it takes the buildings, it takes the maturity.

Speaker #4: But I think lessons learned is that to build something like Chef's Warehouse, it just doesn't get built overnight. You could have all the technology in the world, and it, of course, it really helps.

Speaker #4: But it's just so much more complicated. As you just said, it takes the buildings; it takes the maturity; it takes years to develop a team to win the Super Bowl.

Chris Pappas: It takes years to develop a team, you know, to win the Super Bowl. You know, it's not put up overnight, even though you might have the talent, it just takes that long. I think it's really Goldilocks. If I ever wrote a book, it just takes, it takes a lot longer, you know. When, you know, every time we go on a new path to build a new territory, it always takes a lot longer. To master a new category, it takes a lot longer. I think what, I think what we're seeing, obviously the consumer is, you know, our customer's customer is able to spend, you know, for the better things in life, you know, that we sell, you know, we sell good, better, best, right?

Christopher Pappas: It takes years to develop a team, you know, to win the Super Bowl. You know, it's not put up overnight, even though you might have the talent, it just takes that long. I think it's really Goldilocks. If I ever wrote a book, it just takes, it takes a lot longer, you know. When, you know, every time we go on a new path to build a new territory, it always takes a lot longer. To master a new category, it takes a lot longer. I think what, I think what we're seeing, obviously the consumer is, you know, our customer's customer is able to spend, you know, for the better things in life, you know, that we sell, you know, we sell good, better, best, right?

Speaker #4: It's not put up overnight, even though you might have the talent. It just takes that long. So I think it's really goldilocks. If I ever wrote a book, it just takes a lot longer.

Speaker #4: When every time we go on a new path to build a new territory, it's always takes a lot longer. To master new category, it takes a lot longer.

Speaker #4: So I think what we're seeing, obviously, the consumer is our customers' customer, is able to spend for the better things in life. We sell good, better, best, right?

Speaker #4: So I think people are really appreciating the mastery of these great restaurants and their talented chefs that are putting the food together. And I think it's like an orchestra, right?

Chris Pappas: I think people are really appreciating, you know, the mastery of these great restaurants and their talented chefs that are putting the food together. I think it's like an orchestra, right? It has to learn how to play together and just get better and better. I think, you know, the chef, you know, Chefs' Warehouse, you know, complete business, you know, whether it's produce, whether it's groceries, whether it's dairy, protein, I think it's just getting better and better, and I think we're seeing the results.

Christopher Pappas: I think people are really appreciating, you know, the mastery of these great restaurants and their talented chefs that are putting the food together. I think it's like an orchestra, right? It has to learn how to play together and just get better and better. I think, you know, the chef, you know, Chefs' Warehouse, you know, complete business, you know, whether it's produce, whether it's groceries, whether it's dairy, protein, I think it's just getting better and better, and I think we're seeing the results.

Speaker #4: It has to learn how to play together and just get better and better. And I think the chef's warehouse complete business, whether it's produce, whether it's groceries, whether it's dairy, protein, I think it's just getting better and better.

Speaker #4: And I think we're seeing the results.

Speaker #8: Thanks and congrats to you both and the whole team.

Todd Brooks: Thanks, and congrats to you both and the whole team.

Speaker #4: Thank you, Todd.

Chris Pappas: Thank you, Todd.

Christopher Pappas: Thank you, Todd.

Speaker #1: As a reminder to ask a question, please press star one. The next question is from Margaret Mae Binshock from Wolf Research. Please go ahead.

Operator: As a reminder, to ask a question, please press star one. The next question is from Margaret May Bischock from Wolfe Research. Please go ahead.

Operator: As a reminder, to ask a question, please press star one. The next question is from Margaret-May Bischock from Wolfe Research. Please go ahead.

Speaker #9: Hi, guys. Thanks for taking my question. I just wanted to ask on the placement and growth, the 6.2% you guys saw seems to be accelerating.

Margaret May Bischock: Hi, guys. Thanks for taking my question. I just wanted to ask on the placement growth, the 6.2% you guys saw seems to be accelerating. I guess, which lever is doing the most work here, you know, from your sales force to new hires or, you know, digital penetration?

Margaret-May Bischock: Hi, guys. Thanks for taking my question. I just wanted to ask on the placement growth, the 6.2% you guys saw seems to be accelerating. I guess, which lever is doing the most work here, you know, from your sales force to new hires or, you know, digital penetration?

Speaker #9: I guess, which lever is doing the most work here from your Salesforce and new hires or digital penetration?

Speaker #4: I think, again, it's all the levers that are contributing. So I think it's a little bit of everything. Getting leverage on the new facilities, right?

Chris Pappas: I think it's all the levers that are contributing. I think it's a little bit of everything. Getting leverage on the new facilities, right? The more volume, more profitable volume we pump in, you know, you get a bigger bottom line. The technology adding placements is giving us an uptick, you know. Growing into facilities in new territories, we're getting leverage. It's a little bit from a lot of different parts of the business that is giving us that, you know, bigger bottom line at the end of the day.

Christopher Pappas: I think it's all the levers that are contributing. I think it's a little bit of everything. Getting leverage on the new facilities, right? The more volume, more profitable volume we pump in, you know, you get a bigger bottom line. The technology adding placements is giving us an uptick, you know. Growing into facilities in new territories, we're getting leverage. It's a little bit from a lot of different parts of the business that is giving us that, you know, bigger bottom line at the end of the day.

Speaker #4: The more volume, more profitable volume, we pump in. You get a bigger bottom line. The technology adding placements is giving us an uptick. Growing into facilities and new territories, we're getting leverage.

Speaker #4: So it's a little bit from a lot of different parts of the business that is giving us that bigger bottom line at the end of the day.

Speaker #9: Super helpful. And then I just wanted to ask on the M&A environment, given what we were seeing with the macro and some volatility, has that changed valuations that you guys are seeing out there at all or the pipeline or sellers more motivated?

Margaret May Bischock: Super helpful. I just wanted to ask on the M&A environment, you know, given what we were seeing with the macro and some volatility, you know, has that changed valuations that you guys are seeing out there at all, or the pipeline, are sellers more motivated?

Margaret-May Bischock: Super helpful. I just wanted to ask on the M&A environment, you know, given what we were seeing with the macro and some volatility, you know, has that changed valuations that you guys are seeing out there at all, or the pipeline, are sellers more motivated?

Chris Pappas: The pipeline is frothy, but again, years ago, we had to do more M&A to get into the markets faster, you know, to build a national business and now an international business. You know, we're not in need of a lot of M&A, so we're just very patient. You know, we've seen some multiples come down in some deals that have hit our table. You know, we think that, you know, at a certain point, you know, we'll have some good M&A to add to, you know, what we're building. We're just very patient at this point.

Speaker #4: We the pipeline is frothy, but again, years ago, we had to do more M&A to get into the markets faster, to build a national business.

Christopher Pappas: The pipeline is frothy, but again, years ago, we had to do more M&A to get into the markets faster, you know, to build a national business and now an international business. You know, we're not in need of a lot of M&A, so we're just very patient. You know, we've seen some multiples come down in some deals that have hit our table. You know, we think that, you know, at a certain point, you know, we'll have some good M&A to add to, you know, what we're building. We're just very patient at this point.

Speaker #4: And now an international business. So we're just we're not in need of a lot of M&A. So we're just very patient and we've seen some multiples come down in some deals that have hit our table.

Speaker #4: But we think that at a certain point, we'll have some good M&A to add to what we're building. But we're just very, very patient at this point.

Speaker #9: Awesome. Thanks, Chris.

Margaret May Bischock: Awesome. Thanks, Chris.

Margaret-May Bischock: Awesome. Thanks, Christopher.

Speaker #4: Thank you.

Chris Pappas: Thank you.

Christopher Pappas: Thank you.

Speaker #1: There are no further questions at this time. I would like to turn the floor back over to Chris Pappas for closing comments.

Operator: There are no further questions at this time. I would like to turn the floor back over to Chris Pappas for closing comments.

Operator: There are no further questions at this time. I would like to turn the floor back over to Christopher Pappas for closing comments.

Speaker #4: Yeah. Well, we'd like to thank everybody who joined the call today and take time to learn a little bit more about Chef's Warehouse and what we're proud of the last quarter and what the team was able to accomplish.

Chris Pappas: Yeah. Well, we'd like to thank everybody who joined the call today and take time to, you know, learn a little bit more about Chefs' Warehouse, and we're really proud of the last quarter and what the team was able to accomplish. We remain very optimistic about the future, and hopefully this conflict in the Middle East settles down. We look forward for everybody joining our next earnings call. Thank you.

Christopher Pappas: Yeah. Well, we'd like to thank everybody who joined the call today and take time to, you know, learn a little bit more about Chefs' Warehouse, and we're really proud of the last quarter and what the team was able to accomplish. We remain very optimistic about the future, and hopefully this conflict in the Middle East settles down. We look forward for everybody joining our next earnings call. Thank you.

Speaker #4: And we remain very optimistic about the future. And hopefully, this conflict in the Middle East settles down. And we look forward to everybody joining our next earnings call.

Speaker #4: Thank you.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Q1 2026 Chefs' Warehouse Inc Earnings Call

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